Expect 20-25% growth in turbine biz in FY10: Triveni Engg

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Expect 20-25% growth in turbine biz in FY10: Triveni Engg

In an interview with CNBC-TV18, Dhruv M Sawhney, Chairman of Triveni Engineering spoke about the results and his outlook for the company.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Triveni Engg See previous management interviews See what other Experts & Brokerages are saying about Triveni Engg Triveni Engg BSE | NSE 30/05/12 Are Mutual Funds betting on Triveni Engg?

Triveni Engineering declared its first quarter results. Its Q1FY 10 net sales were up 33% at Rs 487 crore. Its EBITDA margin was at 27%. The company's net profit was up 200% to Rs 72.9 crore.

The company is going to demerge Steam Turbine operations.

In an interview with CNBC-TV18, Dhruv M Sawhney, Chairman of Triveni Engineering spoke about the results and his outlook for the company.

Below is a verbatim transcript of the interview. Also watch the video.

Q: If you could explain the rational of the demerger of the steam turbine business and would you consider the demerger of the entire engineering business so will be two separate entities - one sugar and other pure engineering?

A: We as a board have taken this decision to demerge the steam turbine because the timing is such that we are going into high growth period in steam turbine. We are looking at some key growth strategic partnerships, which we will be announcing in the next few weeks, in this business. That's why the unlocking of value of the steam turbine at this time is most appropriate.

Naturally, we will be looking at the other businesses shortly as and when the opportunities for growth arise. This is not just the end. Our focus on steam turbine for which we find fantastic growth areas is still preserving our market share of 75% in the under 50 megawatt line and even in the 15-30 megawatt where over 40%.

Globally, we are doing quite well so we want to focus on this area in a global perspective. We at the moment in steam turbines are third largest in the world and we hope that business to grow quite substantially in the next year or so.

Q: When will the modalities of this demerger be finalised and will the steam turbine business be listed separately and if yes then by when will that happen?

A: We will be announcing full details in three-four weeks. We will be putting the details to Securities and Exchange Board of India (Sebi) first and the board is looking at listed entity.

Q: Any reason why the steam turbine business' sales are down almost 21% though sequentially and even the margins are down about 300 bps?

A: Sequentially, last quarter sales in steam turbine are always high because capital goods people take them to book their six months profits. So this is a little bit of a cyclical business. We are expecting 20-25% growth in the current year so our Q1 numbers on steam turbines are extremely good, looking at the last quarter of the last year.

Orders on hand which is a main indicator since September has gone up by almost 20% and we have over years have orders on hand and all of which are active. Last year during the recession lot of companies including ours had orders for which the clients were slowing down taking deliveries - that's all changed.

So we are very positive on all the three engineering lines - steam, gears and wastewater. There is generally a revival in the confidence and in the small capital goods and steam power there is a lot of activity, a lot of enquiries so we see a very substantial turnaround in this business in FY10.